Of late, in my sessions, I have been getting a lot of queries about bitcoins and cryptocurrencies. I recently addressed a group of middle-aged college teachers who were averse to investing in equities but were keen to start investing in bitcoins as the next best investment after real estate. When I informed them about the risks and tried to advise them against cryptocurrencies, I was met with disbelieving looks and the general attitude was of ‘we know it all’.
One of my co-worker’s 75-year-old uncle, who had invested in traditional investments all his life, called her to ask her to check if he had shortlisted the right funds for investment. All the funds being considered were the best performers of the past 1 year and included small-cap and sector funds. To make matters worse, he was planning to hold these investments only for 2-3 years. Despite her warning him about the pitfalls of this strategy, he invested in these funds saying they had given 30% returns in the past 1 year and even if there is some volatility, he would still make 15% returns.
What amazes me is that time and again people continue to make the same mistakes. They say they can’t take risks but buy at high and sell at low, driven by short-term returns on instruments simply because they feel they have lost out on past returns.
